The Breakaway Resort is replacing its old golf carts with new ones. Each old cart has been depreciated to a book value of $500. Management of the Breakaway has received an offer to purchase the old carts at $1,200 each (which is less than the original purchase price). The Breakaway’s marginal tax rate is 40%.
Required:
Determine the net cash flow per cart that the Breakaway will receive if its man- agers agree to the purchase offer.